Investment or Savings: where should you put your money to earn more?

Decide between investment or savings is one of the most important choices for those looking to make their money profitable. 

This is because each option has its advantages and specific characteristics, but which is the best choice for you? 

In this article, we’ll explore the pros and cons of each alternative, providing detailed insight so you can make more informed financial decisions.

Investment or savings: understand the essential differences

To choose between investment or savings, it is essential to understand their fundamental differences. 

This is because savings are considered a safe type of investment, while investments offer greater potential for returns, but with variable risks.

The security of savings

Savings are known for their simplicity and security, after all, this type of investment is protected by credit protection funds. 

Therefore, it is ideal for those looking for ease and a guarantee of not losing the amount invested, but its return tends to be lower. 

In 2023, savings yields were below 0.7% per month, which in many cases does not cover inflation, resulting in a loss of purchasing power over time.

The versatility of investments

Investments offer a wide range of possibilities, ranging from fixed income, such as government bonds and CDBs, to variable income, such as shares and real estate funds.

Therefore, the choice between investment or savings It depends on your risk tolerance and your financial goals. 

This is because, while fixed income investments can be safer and more predictable, variable income investments have the potential for more significant returns, although they are more volatile.

Comparison of risks and returns

Application Type	Return Potential	Risk Involved	Liquidity
Savings	Low	Very Low	High (daily redemption)
Public Securities	Moderate	Low	Medium to High (varies by title)
Investment Funds	Moderate to High	Moderate	Average
Actions	High	High	High
Real Estate Funds	Moderate to High	Moderate	High

The table above shows how the choice between investment or savings may vary depending on the investor's profile. 

Savings offer liquidity and security, but investments tend to be more profitable, with risks proportional to the expected return.

++How inflation affects your purchasing power and investments – Valorizei.

Analyzing the return on savings and investments

Understanding how your money can grow is crucial to choosing between investment or savings. 

This is because savings income often does not keep up with inflation, while investments can protect your purchasing power.

The reality of savings income

Savings accounts currently yield 70% of Selic + TR (Reference Rate). In a scenario of Selic at 13.75% per year, such as in 2023, their yield is approximately 9.63% per year. 

However, considering an annual inflation of around 6%, the real gain from savings is very small. 

This means that, despite the security, savings are not the best option for those who want to increase their purchasing power over time.

Profitability of fixed income investments

Fixed income investments, such as CDBs, LCIs and Treasury bonds, have higher returns than savings, especially in periods of high Selic rates. 

A CDB that pays 110% of the CDI, for example, can yield around 14.5% per year, easily surpassing savings. 

Therefore, fixed income is an excellent alternative for those who prefer more security, but want a higher return than that offered by savings.

Variable income: potential and risks

For those willing to take more risks, investments in stocks, real estate funds and ETFs can offer significant returns. 

In 2023, the Ibovespa index, the main indicator of the Brazilian Stock Exchange, accumulated an appreciation of 10.5%. 

However, it is important to keep in mind that variable income is subject to fluctuations, which can result in temporary losses. 

Therefore, the choice between investment or savings In this case, it depends on the deadline and the investor's willingness to deal with this volatility.

How to choose between investment or savings according to your profile?

Choose between investment or savings depends on different factors, such as objectives, risk profile and investment horizon. 

Below, we discuss the main features that can help you in your decision.

Conservative profile: prioritize safety

Conservative investors prioritize security and capital preservation. In this case, savings may be interesting for emergencies, but it is recommended to diversify with government bonds or CDBs from solid banks.

This is because these assets offer protection, but with higher returns than savings. In 2023, the Tesouro Selic yielded around 13% per year, surpassing savings by a large margin.

Moderate profile: looking for a middle ground

For those who consider themselves a moderate investor, the choice between investment or savings It can include both fixed income products and IPCA-indexed securities, as well as investment funds, after all, the idea is to balance security and profitability. 

Fixed income funds, for example, have the advantage of being managed by professionals and offer greater profitability compared to savings.

Aggressive profile: growth potential

Aggressive investors, who seek to maximize their gains, tend to opt for variable income. 

After all, stocks and real estate funds, despite being more volatile, can offer returns higher than inflation and the Selic rate over time.

Therefore, the recommendation is to build a diversified portfolio to dilute risks.

In this case, savings serve only as an emergency reserve and not as a main investment.

Investment or Savings: which is the best option for the future?

Planning for the future requires more than choosing between investment or savings, after all, you need to understand how these resources will be able to support your long-term plans.

This is because each option has a distinct role in a successful financial strategy.

Savings as an emergency reserve

Savings, despite the modest returns, have a great advantage: high liquidity.

Therefore, it is a suitable option for building up your emergency fund, and this fund should be enough to cover 3 to 6 months of expenses, ensuring a safety net for unforeseen events. 

However, after building up this reserve, it is important to look for investment alternatives that offer more attractive returns.

Investments for medium and long-term goals

For those thinking about goals such as buying a property, retirement or their children's education, investments are the best choice. 

This is because products such as Treasury IPCA+, shares and pension funds can help build solid assets over time. 

According to data from Brazilian Association of Financial and Capital Market Entities (ANBIMA), the demand for private pension investments grew by 9% in 2023, highlighting the importance of thinking long-term.

Diversification: the secret to a balanced portfolio

One strategy recommended by experts is diversification. Instead of choosing between investment or savings, why not combine both? 

Savings can be a good foundation for emergencies, while investments can offer real wealth growth. 

So this approach balances safety and growth potential, allowing the investor to take advantage of the advantages of each option.

Final considerations: investment or savings – which is the best choice?

The choice between investment or savings It's not a question of right or wrong, but rather of aligning your decisions with your financial goals. 

This is because savings can be suitable for those seeking security and immediate liquidity, while investments are ideal for those who want to increase their income and protect their assets from inflation.

As Warren Buffett, one of the world's greatest investors, points out, “The risk comes from not knowing what you are doing.” 

Therefore, knowing the characteristics of each option is essential to making better decisions. 

Additionally, evaluate your profile, your goals and the timeframe of your objectives to choose the path that best aligns with your needs.

Now that you better understand the differences between investment or savings, evaluate your options and choose the strategy that will help you achieve your financial goals. 

This way, you will be better prepared to ensure a financially secure and prosperous future.

Read also: Conservative Profile? See the best strategies and investments - Valorizei.